Jet-Etihad deal may add fuel to Air India's star dreams

MUMBAI: A prospective deal between Jet AirwaysBSE 0.53 % and Etihad Airways is making Air Indiahopeful of emerging as the favourite to partner the largest airline grouping, Star Alliance Services GmbH, which has so far shunned Middle-Eastern carriers, a senior AI executive said. 

In an interaction with ET, Air India CMD Rohit Nandan, who is currently leading the turnaround of India's national airline, argued that it gives them unwitting opportunities such as an upper hand to strike a deal with Star Alliance. 

He admitted, however, that the Jet-Etihad alliance could pose a major challenge for AI's overseas operations. "Jet's discussions for a strategic alliance with Etihad will help Air India's chances (for Star Alliance membership). 

We are in continuous dialogue with Star Alliance and joining the Alliance is in our interest. Star Alliance did deviate in between for a short while (when Jet formally requested membership) but they would now see Air India more favourably," Nandan told ET. 

Air India is bracing for the challenge posed by private sector peers who are in talks with Middle-Eastern carriers for a strategic partnership. "There are always threats in the marketplace, but there are opportunities too," Nandan said. 

The three international airline alliances - Star, Oneworld and SkyTeam - are coveted by airlines worldwide as it enables access to new markets and facilities such as common lounges, wider networks etc. 

Air India was sidelined in the initial rounds for membership into the elite Star Alliance in favour of Jet Airways, but is now staking its claim yet again as a possible deal between Jet and the Abu Dhabi-based Etihad Airways may not go down very well with Star Alliance members.

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/jet-etihad-deal-may-add-fuel-to-air-indias-star-dreams/articleshow/17498232.cms

Waheed’s special adviser plotted GMR’s ouster?

NEW DELHI: Hassan Saeed, the Maldivian president Waheed's special adviser, is being seen as the Machiavellian force behind Male's decision to terminate the GMR agreement. According to high-level sources, this Malaysia-educated president of a tiny Dhivehi Quamee Party has convinced Waheed to use this issue as a platform for forthcoming presidential elections due next year. 

Masood Imad, spokesperson for Waheed, denies this. "Saeed is only a special advisor and is currently not even in the country," he said. 

Imad said Indian companies continue to be present and welcomed in the Maldives. "The Maldivian government had offered to send a special envoy of the president, the defence minister, to India to explain our stand on the GMR issue. But that request is still pending with the MEA," he added. 

MEA sources said the government had received the request for a special envoy, to which the Indian government had responded by saying he would be welcomed and received appropriately. As it turned out, the envoy did not come, and the Maldivian foreign minister Abdul Samad Abdulla arrived here last week for consultations with his Indian counterpart Salman Khurshid. 

Saeed had dashed off a letter to Prime Minister Manmohan Singh seeking India to help terminate the agreement. The GMR issue was so explosive, he said, it was contributing to the rise of extremism and anti-India, anti-GMR sentiment inside the Maldives. GMR, he alleged, had paid off politicians in the Maldives which had turned public opinion against them. Apart from levying an airport tax, Saeed said, GMR had evicted local workers and replaced them with Indians. GMR sources indicated the converse was true. 

Maldives has given GMR until December 8 to get out of the Male airport. GMR's CEO Andrew Harrison, in a statement, said, "The injunction clearly prevents them from taking the action outlined in their notice issued to us stating that the airport would be taken over at the end of the 7 day period. We remain resolute in our position and there is no question of an offer being made and certainly no question of any alleged offer being accepted as we will simply not agree to our rights nor the injunction being undermined in any way." 

This can only have an ugly ending. While there has been no communication with Waheed, Abdulla told Khurshid that they were determined to evict GMR. India can either look the other way, or adopt strong-arm tactics neither of which has any good implications. 

Ousted president Mohamed Nasheed wrote this week, "India should have foreseen the consequences its investments would later face in endorsing a regime consisting of elements that had previously shown its disapproval towards major Indian investments. India should have taken its time to assess the political situation of the country and should have confirmed the legitimacy of the controversial regime before accepting it. However, failure to do so resulted in the scrapping of its single largest investment by the very government it had recognized."

http://timesofindia.indiatimes.com/india/Waheeds-special-adviser-plotted-GMRs-ouster/articleshow/17495508.cms

As GMR deadline nears, Waheed regime on the back-foot

Nasheed’s party successfully gets amendments to Parliamentary rules cleared to impeach the President

As the December 7 deadline that the Maldivian government set for throwing out the Male airport operator, the India-based multinational GMR, nears, two developments have forced the government on the back-foot : One, a piece of legislation that has been passed in the Majlis (Parliament), and two, the main opposition party, the Maldivian Democratic Party’s reformed ways.

Parliament on December 3 voted 41-34 to approve amendments to parliamentary rules to conduct no-confidence votes to impeach President and members of his Cabinet by a secret ballot. The success of the vote was the first MDP victory in several months. It was an MDP initiative, and this time, it had the support of two parties that had earlier thrown its lot with the government. Former President Mohamed Nasheed’s party, the MDP, finding allies is the second development.

“We have submitted a petition to move a no-confidence motion to remove the Defence Minister [Mohamed Nazim] and the Home Minister [Mohamed Jameel] just a short while ago,” MDP’s International spokesperson Hamid Abdul Gafoor told The Hindu over phone from Male on Tuesday evening. “With the JP and DRP supporting us in the vote [on December 3], we are sure we will have the numbers when the motion is taken up for voting,” he added.

Street protests

Not satisfied with the parliamentary attack on the government, the MDP also organised street protests on Tuesday to “protest the manner in which the government was treating foreign investments.”

At the heart of the tussle is the modernisation of the Ibrahim Nasir International Airport, which was handed over to GMR after a process of competitive international bidding overseen by a World Bank body. Last year, GMR decided to levy a user development free of $25, which led to widespread protests. Later, a court order stayed the charge.

After Mr. Nasheed resigned as President on February 7, 2012, the new government, led by Dr. Mohamed Waheed wanted to review the terms of agreement granted to GMR. A few members of the Waheed government were openly against the airport operator and had been demanding that GMR leave the country. The GMR investment is the largest FDI in Maldives.

Status quo

Status quo was ordered on Monday, on a Singapore-based arbitration. The news delighted the MDP, and made some elements of the Waheed government defiant. “I am delighted to hear that the Singapore courts have intervened in this dispute and upheld the rule of law. I look forward to GMR continuing its operations and completing the construction of a new, world-class airport terminal,” Mr. Nasheed said after the verdict.

Ministers Mr. Nazim and Mr. Jameel refused to back off and GMR was given seven days to clear out. As a first step to hindering operations, Maldives Immigration refused to renew the work visas of the foreign staffers whose visa was due for renewal.

Double-speak

Dr. Waheed has employed a double-speak that is central to the problems that India, and Indian firms have faced in Maldives since the transition since February this year. For instance, speaking at a function to mark the 47th anniversary of establishment of diplomatic relations between Male and New Delhi, Dr. Waheed said that Maldives would always welcome Indian investments. “International businesses that have done well are those that are built on mutual trust and respect… small countries are very conscious of their national pride and sovereignty… It is not a secret that we are currently facing some difficulty with some Indian companies, we must overcome these difficulties and adamantly resist such difficulties from affecting our very close and brotherly relationship.”

Dr. Waheed has repeatedly made such commitments, and said that he believed in solving issues through negotiations. Despite the assurances, Maldives is now forcing India’s hand on the GMR issue.

http://www.thehindu.com/news/national/as-gmr-deadline-nears-waheed-regime-on-the-backfoot/article4164826.ece

Airports authority of India backs multi-modal hub at Trivandrum airport

THIRUVANANTHAPURAM: The airports authority of India (AAI) has agreed to give its backing for a multi-modal hub at the Trivandrum international airport.

The proposal if implemented will make the airport the only one in its category to have access to all five modes of transport.

"The propensity of the airport to become the only airport in its category, having all five modes of transport - rail, road, air, inland waterway and sea - forming a great hub, will generate more traffic and demonstrate the contemporary outlook of a modern airport," AAI member planning S Raheja has said in his letter to the chief secretary.

The proposal a brainchild of Thiruvananthapuram airport director VN Chandran, has been well-received by AAI HQ, so much so that the Member Planning AAI, S Raheja, has shot off

In his letter Raheja has asked the government to examine the proposal and take forward the project. "The necessary backing of the scheme has been conveyed to the state government by the AAI, now it is time to look forward to the day when the futuristic project will come to life," said Chandran.

The state government has to get a fix on the modalities and commit to conducting a technical feasibility study and put the scheme under appropriate departments. Thiruvananthapuram International Airport Development Society, which is likely to be revived by the state government, could play a major role in the project.

The proposal involves the cleaning of the Parvathy Puthanar canal which flows right in front of the new terminal building. Once cleaned it could easily connect tourist hot-spots such as Kovalam and Alleppey backwaters.

The mono-rail project with its 28.4 km single rail mass transit system connecting Kazhakootam and Balaramapuram could be extended to the new international terminal building, adding a world-class touch to the city. Besides, it would be a lucrative proposal for the Trivandrum International Airport which handled around 18.4 lakh international passengers in 2011-12. The NH-47 bypass which is located on the eastern boundary of the airport can offer another cheap mode of transport via buses.

In addition to this a cruise terminal can be set up at Shanghumugham, instead of Vizhinjam where the sea meets the airport adding another dimension to holiday travel.

http://timesofindia.indiatimes.com/city/thiruvananthapuram/Airports-authority-of-India-backs-multi-modal-hub-at-Trivandrum-airport/articleshow/17499021.cms

GMR suspects foreign hand in Male airport crisis

Days after it was unceremoniously thrown out of Maldives’ biggest airport project, GMR Infrastructure, on Wednesday, said involvement of a foreign country in Island nation’s decision could not be ruled out.

“I can’t say that for sure. But, looking at the political situation and political framework in Maldives, I can’t rule out anything,” GMR Airports CFO Sidharth Kapur told reporters here. He was responding to a query on whether GMR saw involvement of a foreign country such as China in cancellation of its over $500 million contract to build and operate the Male airport. Mr. Kapur, however, did not elaborate on the possibility of the involvement of foreign nation.

Singapore decision

Maldives has refused to abide by a Singapore court decision that stayed the termination of GMR contract, and has said it will go ahead with its decision to takeover the airport by Friday.

GMR has so far refused to take Maldives’ bait of compensation for the cancellation, saying it was in the nation for operating the airport and not for compensation.

Asked whether the company would appeal to the International Court of Justice, Mr. Kapur said, “We expect and appeal to the Maldives government to honour international law.”

GMR, he said, was still hopeful of an “amicable solution” to the crisis, but maintained that repeated attempts to get in touch with the Maldivian President were yet to elicit any response Mr. Kapur said the company was thankful for India’s support to it since the beginning of the crisis, and hoped New Delhi would “take everything possible from their armoury to ensure that something amicable comes out.”

Asked whether the company tried to reach out to the main Opposition in Maldives, he said, “We have tried to speak to everybody so far. We are completely committed to the project.” 

http://www.thehindu.com/todays-paper/tp-business/gmr-suspects-foreign-hand-in-male-airport-crisis/article4168979.ece

N-AiCourt tells Kingfisher to deposit tax money with IT departmentr, a subsidiary of US-based Naki Air, is planning to operate charter services in Fujairah-Visakhapatnam-Bangkok with effect from the first week of January 2013, according to a statement issued by president of Air Travellers Association of India president D. Varada Reddy. The exact date of operation would be announced by N-Air shortly. The flights are also expected to carry cargo towards Bangkok and Fujairah/Dubai. The ATA (I) had recently arranged a meeting with the Customs, AAI, Airlines and representatives of the exporters to resolve issues relating to export procedures. In a separate release, Mr. Varada Reddy, who is also a member of the Zonal Railway Users Consultative Committee (ZRUCC) appealed to General Manager East Coast Railway Indra Ghosh to extend the Visakhapatnam -Kollam- Visakhapatnam special train, the services of which are scheduled to end on December 28, till January 30 for the benefit of Ayyappa devotees going to witness the Makara Vilakku. http://www.thehindu.com/todays-paper/tp-national/tp-andhrapradesh/nair-plans-charter-services/article4169803.ece

In a setback to Kingfisher Airlines, the Karnataka High Court, on Wednesday, directed the company to deposit 50 per cent of the total amount of Rs.371 crore that the company is required to remit to the Income Tax Department as tax deducted at source (TDS) from its employees and payments made towards company expenses.

The High Court has also asked the company to furnish bank guarantee for the remaining amount

Though the Department claims that the total amount due is Rs.371 crore, the company has disputed this and has claimed that the amount payable is much less.

However, the Court has said that TDS already remitted by the company would be adjustable in computing the amount to be deposited.

A Division Bench, comprising Justice D. V. Shylendra Kumar and Justice B. Manohar, passed the interim order on the separate appeals filed by the Department and the company, challenging the May 25 order of the Tribunal.

The Tribunal, while allowing an appeal by the company against the demand to pay TDS amount, had said that the Department had issued notices without providing the company a reasonable and sufficient opportunity of being heard. The Tribunal had remanded the matter back to the Assessing Officer for fresh consideration.

The Tribunal also had said that it was not clear whether TDS was only in connection with the salary or also about other payments of expenses.

On appeals filed by the Department, a Division Bench of the High Court in June had passed the interim order, staying the operation of the Tribunal’s order. Subsequently, the company too filed appeals against the Tribunal order and another Division Bench granted stay in favour of the company.

The contentious issue dates back to December last, when the Department demanded payment of Rs.371 crore as TDS from the company for assessment years 2010-11, 2011-12, and 2012-13, following analysis of records during search conducted in the company’s premises in Bangalore and other places. Later, the Department had attached the bank accounts of the company for some period during February, 2012, and had recovered some part of the amount, and subsequently the company itself had made some payments.

The Department’s claim has been that the company had illegally withheld the revenue payable to the government even after deducting the said amount from various sources, including by way of TDS.

The Court has adjourned further hearing on the appeals.

http://www.thehindu.com/todays-paper/tp-business/court-tells-kingfisher-to-deposit-tax-money-with-it-department/article4168974.ece

N-Air plans charter services

N-Air, a subsidiary of US-based Naki Air, is planning to operate charter services in Fujairah-Visakhapatnam-Bangkok with effect from the first week of January 2013, according to a statement issued by president of Air Travellers Association of India president D. Varada Reddy.

The exact date of operation would be announced by N-Air shortly. The flights are also expected to carry cargo towards Bangkok and Fujairah/Dubai. The ATA (I) had recently arranged a meeting with the Customs, AAI, Airlines and representatives of the exporters to resolve issues relating to export procedures.

In a separate release, Mr. Varada Reddy, who is also a member of the Zonal Railway Users Consultative Committee (ZRUCC) appealed to General Manager East Coast Railway Indra Ghosh to extend the Visakhapatnam

-Kollam-

Visakhapatnam special train, the services of which are scheduled to end on December 28, till January 30 for the benefit of Ayyappa devotees going to witness the Makara Vilakku.

http://www.thehindu.com/todays-paper/tp-national/tp-andhrapradesh/nair-plans-charter-services/article4169803.ece

All eyes on Singapore as deadline for GMR nears

No activity at the Ibrahim Nasir International Airport here on Wednesday indicates that it is amid a political storm that will hit the island-airport in hardly 48 hours. Employees go about their jobs, scheduled flights carrying — largely — Chinese tourists make their landing on the appointed time through the day. Customs officials make enquires with the infrequent south Asians arriving amid a sea of Chinese tourists.

Come Friday midnight, and the airport’s operator, India-based multinational, GMR, will have to handover the airport to Maldives Airports Company. GMR has dug its heels in and has said it can’t do as directed. Either way, GMR will not be able to operate the airport after 23:59 on December 6 as the Civil Aviation Authority will revoke the aerodrome license from then.

Representatives of two airlines and a tour operator said they were not tensed, but still were watching the situation carefully. As of now, there are no mass cancellations, one tour operator said. But the stand off would affect the peak season, a local journalist said.

The dispute, which has been simmering since February 2012, led to arbitration proceedings in Singapore – as provided for in the contract – and the Singapore High Court had stayed the government move to take over. A defiant government has refused to accept the order and has said it will retake the airport, regardless of the consequences. A combination of misplaced egos, political expediency and bad judgement means that there is not even a negotiating table in sight.

Despite its professed and publicly-declared intention of throwing out GMR, the Maldives government — in a strange move — has appealed against Singapore High Court order. Sources familiar with the development said the Singapore Supreme Court is expected to take up the case on Thursday, barely a day ahead of the December 7 deadline.

While the war of nerves continues at one level, there is a surprising calmness that seems surreal. For instance, many tourists were unaware of what the GMR issue was. Work on refurbishing the airport goes on all over the airport and the scaffoldings cover most parts of the airport. The boats in the wharfs nearby, the only mode of transport to the nearby capital city of Male, ferry passengers to nearby destinations.

But scratch the surface and the reality emerges. “We don’t know what will happen,” said an airport hand, a Maldivian, who did not want to be named. It seems that the government’s assurance that he will not lose his job has no effect. Hotels have seen a dip in business, but that has more to do with the political uncertainty than with the GMR-government tussle.

---

·  The dispute has been simmering since February

·  Singapore Supreme Court may take up case today

http://www.thehindu.com/todays-paper/tp-national/all-eyes-on-singapore-as-deadline-for-gmr-nears/article4169196.ece

State will back Aranmula airport project: Chandy

Chief Minister Oommen Chandy has said that the State government will continue to support the Aranmula airport project. However, more land has been acquired for the project than required and this will be de-notified as announced earlier.

The Chief Minister told the media here on Wednesday that several proposals had been mooted regarding the airport, including equity participation by the State. The government had not taken any decisions on the proposals. The project had proponents and opponents among the general public. The government would accept what was right and correct what was wrong.

Mr. Chandy said the government was committed to providing continuity to the projects mooted by the previous government. The airport proposal was one promoted during the term of the Left Democratic Front and the then Chief Minister V.S. Achuthanandan had signed the relevant files. The present government had not taken a position against the project. However, if there was anything wrong with the proposals, it would correct them openly.

The Chief Minister said the government would cooperate with the Kochi- Muziris Biennale. However, he may not be able to attend the opening ceremony of the biennale because the Assembly would be in session on December 12. “The reason is only technical.”

Mr. Chandy said the government would not give further financial assistance to the biennale in view of alleged financial irregularities regarding Rs.5 crore sanctioned by the previous government. This did not mean that the government had come to a conclusion that the organisers were guilty. The inspection wing of the Finance Department, which had scrutinised the expenditure, had reported serious irregularities.

These had been referred to the Vigilance and Anti-Corruption Bureau for investigation.

http://www.thehindu.com/todays-paper/state-will-back-aranmula-airport-project-chandy/article4169489.ece

 

Court asks Kingfisher Airlines to remit half its TDS dues now

Bangalore, Dec. 5:  

In a setback to Vijay Mallya-owned Kingfisher Airlines, the Karnataka High Court on Wednesday directed the company to deposit 50 per cent of the Rs 371 crore that it is required to remit to the Income-Tax Department as tax deducted at source (TDS) from its employees and payments made towards expenses.

The High Court has also asked the company to furnish bank guarantee for the remaining amount due to the Department, within six weeks.

The airline’s contention is that the amount due is much less than the demand made by the IT Department. The court has however, said that the TDS already paid by the company would be adjusted in computing the amount to be deposited. A Division Bench comprising Justice D.V. Shylendra Kumar and Justice B. Manohar passed the interim order on the separate appeals filed by the Department and the company challenging the May 25, 2012 order of the Income Tax Appellate Tribunal.

The Tribunal, while allowing an appeal by the company against the demand to pay TDS amount, had said that the Department had issued notices without providing the company a reasonable and sufficient opportunity of being heard. The Tribunal had remanded the matter back to the Assessing Officer.

The Tribunal also had said that it was not clear whether TDS was only in connection with the salary or also about other payment of expenses. On appeals filed by the Department, a Division Bench of the High Court in June this year had passed the interim order staying the operation of Tribunal’s order.

Subsequently, the company too filed appeals against the order of the Tribunal and another Division Bench granted stay in favour of the company. The contentious issue dates back to December last, when the Department, in December 2011, had demanded payment of about Rs.372 crore as TDS from the company for the assessment years 2010-11, 2011-12, and 2012-13, following analysis of records during search conducted in company’s premises in Bangalore and other places.

Later, the Department had attached bank accounts of company for a certain period of time during February 2012 and had recovered some part of the amount, and subsequently the company itself had made some payments.

The Department’s claim has been that the company had illegally withheld the revenue payable to the Government even after deducting the said amount from various sources, including by way of TDS.

http://www.thehindubusinessline.com/todays-paper/tp-corporate/court-asks-kingfisher-airlines-to-remit-half-its-tds-dues-now/article4168264.ece

Mallya seeks more time; lenders reschedule meet to December 17

New Delhi, Dec. 5:  

Kingfisher Airlines’ promoter Vijay Mallya has sought more time with the 17-bank consortium to present a suitable proposal for the beleaguered private carrier.

Following this request, the bank consortium on Wednesday rescheduled its meeting to December 17 to consider the Kingfisher Airlines’ matter, sources in the banking industry said.

The bankers’ had earlier planned their meeting at Mumbai on December 8. No specific venue has been decided yet for the December 17 meeting, sources said. The 17-bank consortium has exposure of about Rs 7,000 crore to the ailing private carrier. The Government had recently amended the foreign investment rules to allow foreign airlines to pick up to 49 per cent stake in domestic airlines.

http://www.thehindubusinessline.com/todays-paper/tp-money-banking/mallya-seeks-more-time-lenders-reschedule-meet-to-december-17/article4168361.ece

Kingfisher loans: Banks hope for ‘amicable solution’

Mumbai, Dec. 5:  

State Bank of India, the leader of the consortium of banks that have lent to the grounded Kingfisher Airlines, on Wednesday said the banks are trying to do everything possible to find an amicable solution to the carrier’s financial troubles.

“They (KFA) have created a brand value, they are a good company and we are trying to do everything so that an amicable solution to the problem is found,” said Diwakar Gupta, Managing Director and Chief Financial Officer, SBI, on the sidelines of a PwC event.

The Bangalore-based airline owes about Rs 7,000 crore to a consortium of 17 banks. KFA owes about Rs 1,500 crore to SBI. The cash-strapped airline has accumulated losses of nearly Rs 10,000 crore.

SBI Chairman Pratip Chaudhuri had asked the airline management to infuse at least $1 billion by November 30 for reviving the airline. If this had come through, banks would have considered lending afresh or recasting their existing loans to KFA. However, the airline promoter has not brought in his equity contribution so far.

Since its inception in 2005, the airline has not reported any profit. The losses of Kingfisher Airlines widened to Rs 754 crore for the September quarter this fiscal as compared with Rs 469 crore in the year ago period.

The airline has been grounded since October 1, following a strike by its pilots and engineers over non-payment of salary. Consequently, the Director General of Civil Aviation suspended the airline’s flying licence on October 19. The airline officials have not been able to sort out regulatory issues that are imperative for it to resume operations.

In a further blow to the beleaguered airline, the cash-strapped carrier may have to vacate the space it occupies at Mumbai Airport. The Mumbai airport authorities may issue an eviction notice after the grounded carrier failed to respond to an earlier notice asking it to clear the Rs 22 crore dues towards parking and navigation charges.

http://www.thehindubusinessline.com/todays-paper/tp-money-banking/kingfisher-loans-banks-hope-for-amicable-solution/article4168329.ece

Want Maldives to honour international law: GMR

New Delhi, Dec. 5:  

Bangalore-based GMR Group hopes that the Maldives Government will honour its commitment to international law with regard to cancelling the company’s licence to modernise the Male international airports.

Addressing a press conference here on Wednesday, Sidharath Kapur, Chief Financial Officer, GMR Airports, said the company was not really interested in settling the matter through payment of compensation for cancelling the contract.

“We expect and appeal to the Maldives Government to honour international law. Any termination is unlawful and against the due process of law. Any force will be seen impacting Indian interests.

“We have been assured by the country’s Defence Minister, who is also acting Transport Minister, that force will not be used to remove us from Maldives airport,” Kapur said.

He added that use of any force would be seen impacting Indian interests.

On December 1, the Maldives Cabinet cancelled the contract after which GMR will have had to vacate the Male airport within the next 48 hours. GMR officials said it would be difficult to comment on how things would play out over the next two days.

On Monday, a Singapore court stayed the cancellation of the contract, but the Maldives Government said it was going ahead with its decision and gave GMR time till December 7 to vacate the airport.

Pointing out that there was a compensation clause in the agreement, officials said the exact amount had not been calculated yet.

“We are not using compensation as a route. We have seen report of $700 million. Looking at the finances of the Maldives, it will have a very serious detrimental impact on the finances of the country. Our plea is that we want to settle the issues through a legal process,” Kapur said.

Officials said compensation was a complicated calculation as it covered payments to vendors and was supposed to be done before termination.

“It covers entire equity infusion, return on equity, damages and termination of any sub-contracts. If we have any damage on that account, it is covered as part of compensation,” Kapur said.

GMR officials rebutted the allegations that the award of contract to GMR group was leading to revenue loss to the Maldives Government.

http://www.thehindubusinessline.com/todays-paper/want-maldives-to-honour-international-law-gmr/article4168292.ece

Work on Indo-Russian transport aircraft begins

The Indo-Russian project to jointly design a transport aircraft for militaries of both nations kicked off in Moscow on Monday, where 30 engineers from Hindustan Aeronautics Ltd (HAL) began working with their Russian counterparts from the United Aircraft Corporation (UAC) on the $600-million project.

India and Russia are also collaborating in a $6-billion project to build an advanced fighter called the Fifth Generation Fighter Aircraft.

“Our team in Moscow informed us today they are now functional at the special design facility that Russia has set up,” confirms NC Agarwal, the Chief Executive Officer of the joint venture company, called Multirole Transport Aircraft Ltd (MTA Ltd), which will design the aircraft.

The MTA will be capable of carrying 15-20 tonnes of payload; or 80 paratroopers; or 60 stretchers and operate from airfields as difficult as Leh, in Ladakh, J&K. After completing the design and testing of the MTA in 60 months, during which five prototypes will also be built, Russia and India will join hands in building 205 aircraft: 100 for the Russian Air Force (RAF); 45 for the Indian Air Force (IAF); and 60 for export.

For the IAF, the MTA would be a much-needed replacement for the already phased out AN-12 and the ageing AN-32 transport aircraft. The MTA will be a mid-way choice, being smaller than the AN-12, but bigger than the AN-32. Both those aircraft were propeller-driven turboprops; the MTA will have a turbofan jet engine.

The choice of which engine to use, as also the various systems of the aircraft which would be bought off the shelf, would be decided jointly, based on economy as well as suitability.

New Delhi and Moscow signed an Inter-Governmental Agreement (IGA) in November 2007; after which HAL, UAC and MTA Ltd signed a General Contract, an umbrella document that defines the broad framework of the contract. Then came a $35-million contract for the Preliminary Design Phase (PDP), signed on October 12, 2012, which provided for a joint HAL-UAC team to work for the next 10 months in Moscow. The team will formalize the MTA’s configuration, basic performance, its various systems, the engines, and identify alternatives as well. This will be done to ensure that the RAF’s and IAF’s requirements are fully met.

While the PDP is being completed by September-October 2103, another contract will be signed for the Detailed Design Phase (DDP), in which both sides will take 48 months to complete the design, prototype production and flight-testing of the MTA in accordance with work shares that have been defined in the contract.

“India will carry out some 40 per cent of the design work, while Russia will do the remaining 60 per cent” says Agarwal. “But it will be a collaborative enterprise, since everything has to come together smoothly, without loss of time.”

In production, which is expected to begin by end 2017, HAL and UAC will respectively manufacture a specified set of parts and modules for all 205 MTAs. However, the assembly of the IAF aircraft will be done at HAL, Kanpur; and the assembly of MTAs for the RAF from a production agency that Moscow nominates.

The crucial aspect of certification will be a collaborative exercise between the Indian military certification agency, CEMILAC (Centre for Military Airworthiness Certification) and its Russian counterpart. According to current plans, the MTA will also meet the certification specifications of the US Federal Aviation Authority (FAA), which is called FAR-25 (Federal Airworthiness Requirement – 25), as well as the European JAR-25 (Joint Airworthiness Requirement – 25). This will make the MTA more attractive to international buyers.

http://www.business-standard.com/india/news/workindo-russian-transport-aircraft-begins/494517/

GMR gets Singapore court relief, but Maldives sticks to its guns

Male calls contract termination irreversible, makes it clear firm has to hand over airport on Dec 7

The Maldives government took a firm stand today, saying the termination of GMR Infra’s 25-year concession contract to run the Male international airport was “non-reversible”. The island nation’s government made it clear that GMR Male International Airport Ltd (GMIAL) would have to hand over the airport on the midnight of December 7.

The move comes even as a Singapore court, where GMIAL had challenged the order, granted it “injunctive relief” against the termination by the Maldives government on November 27. GMIAL had been awarded the contract in June 2010 during the tenure of former president Mohamed Nasheed, but after his ouster, the new government under Mohammed Waheed attacked the contract, which had brought the largest FDI in the country, seeing it as a “sweet deal” favouring GMR — an allegation it vehemently denied.

According to the interpretation of the Maldivian government, the Singapore court’s judgment does not prevent the cancellation of the contract if compensation is given. It has also appealed against the court’s decision. “Our decision is based on legal advice from lawyers in the UK and Singapore; the judge was incorrect in interpreting the law. Where compensation is adequate, an injunction cannot be issued. A court cannot issue such an injunction against a sovereign state,” saidMasood Imad, the Maldivian President’s media secretary.

A GMIAL spokesperson said: “We cannot comment on the statements from the Maldives government. They have participated in the hearing and were present at the court proceedings. We expect them to respect the order.” GMIAL CEO Andrew Harrison told a news agency the sovereign guarantee in the agreement should be “respected”.

Imad said the government expected GMIAL and Maldives Airport Company Ltd (MACL) would come to a settlement and the consortium, led by the Indian firm, would hand over the airport peacefully. He, however, added Maldives courts’ recourse would have to be taken to implement the decision if the consortium didn’t comply.

The top Maldives official also said, even as GMIAL was looking at a compensation of $550 million, the government had asked MACL to provide complete details of how much the company had spent in the country. “We will have a better picture of the compensation package we need to give after this exercise is undertaken,” he added.

Imad rubbished GMR’s contention it should have got a 65-day notice, according to the agreement. “The guarantee under section 19.22 of the agreement clearly says five days’ notice has to be given,” he added.

The Maldives government says it had to cancel the contract after MACL communicated to it that it might go bankrupt if it had to pay in liue of the airport development charge, imposition of which a civil court ruled against.

http://www.business-standard.com/india/news/gmr-gets-singapore-court-reliefmaldives-sticks-to-its-guns/494498/

Male Airport uncertainty clouds GMR Infra's prospects

After dropping to its all-time low of Rs 16.75 last Thursday post the Maldives’ government cancelling the airport contract with GMR Infrastructure, the latter’s share price has recovered 17.3 per cent, including the 5.4 per cent rise seen on Monday. The gains are consequent to the company getting a stay order against the cancellation of the contract from the High court of Singapore. Secondly, post the event, promoters have also bought shares from the open market. While most analysts believe there would not be much impact on stock valuations even if the airport development contract is cancelled, they see potential loss in revenues and profits which could mean some pressure on the stock in the interim as it would come at a time when some of GMR’s domestic businesses are under pressure.

GMR has so far has invested about Rs 126 crore in the airport through its 77 per cent subsidiary, GMR Male’ International Airport Private Ltd (23 per cent is held by Malaysia Airports Holding Berhad). This investment is equal to 1.4 per cent of GMR’s consolidated shareholders’ funds of Rs 9,161 crore (as of end-September) and 1.7 per cent of its market capitalisation of Rs 7,648 crore. This explains that even if the investments are required to be written off (worst case scenario) the valuations may not change drastically. Secondly, GMR’s stock is currently trading near historically low levels and analysts believe that most of the negatives are reflecting in the price.

GMR holds various infrastructure assets, including two prestigious Delhi and Hyderabad airports (almost a third of revenues), several road and power projects. In these segments, the company has invested equity capital of about Rs 9,500 crore, which make up for most of its stock valuation. In comparison, the Maldives project is small.
 

TURNAROUND IN FY14
In Rs crore	FY 12	FY13E	FY14E
Net sales	7,642.1	9,471.8	11,728.6
Ebitda	1,758.2	2,759.1	4,134.1
Ebitda (%)	23.0	29.1	35.2
Net profit/(loss)	-441.2	-353.6	348.5
EPS (Rs)	-1.1	-0.9	0.9
PE (x)	NA	NA	21.8
E: Estimates                                                             Includes Male Airport financials  Source: Nirmal Bang Institutional Equities Research

KEY STATISTICS
	In Rs crore
Maldives airport project size	2,810.50
Investment so far (equity+debt)	1,265.00
Total equity investment	165.00
GMR’s equity contribution	126.50
GMR’s total shareholder's funds	9,161.00
GMR’s equity in male/total equity	0.01
Market cap of GMR	7,648.00
GMR’s equity in Male/Market cap	0.02

Deepak Purswani, who is tracking the company at ICICI Securities, has valued GMR’s stock at Rs 20 per share. He says, “In terms of valuation, Maldives Airport was contributing Rs 0.6 per share in our valuation. Hence, we are removing that from our valuation now”. Consequent to the uncertainty, analysts at Nirmal Bang have also excluded the project in their valuation estimates and accordingly lowered their target price for GMR from Rs 27 to Rs 26.

However, there is one more dimension to the Male airport episode. Analysts were expecting the airport to contribute about 10-12 per cent to the company’s consolidated revenues and about Rs 150 crore in annual profits in FY13 and FY14. Including the Male airport, analysts were expecting GMR to report a turnaround (profit of over Rs 350 crore) in FY14. Given that the contract involves building and operating the airport for a period of 25 years (extendable by another 10 years), the company would lose out on future revenues and profits as well, if the contract is terminated.

Nevertheless, the Maldives project cannot be written off today, as the company has taken legal action to protect its interests. On this front, the Singapore court has given a stay order. Recently, Axis Bank has also sent notice to Maldives government for the recovery of its $350 million loan given to GMR Infrastructure. Besides, there is also pressure from India’s foreign ministry (as the news reports suggest) which could impact the bilateral ties between the two countries (if the matter is not dealt with lawfully).

http://www.business-standard.com/india/news/male-airport-uncertainty-clouds-gmr-infra%5Cs-prospects/494453/